Canon made headlines and gave a small amount of momentum to the idea of “.brand” top-level domains when it announced, a year ago, that it would apply to ICANN to manage .canon.

There are plenty of good reasons why the company would want the TLD.

Beyond the more obvious search-oriented branding opportunities, some say Canon could try to boost customer loyalty and create new revenue streams by offering camera buyers services such as photo hosting at personalized .canon domains.

But here’s another reason that doesn’t seem to have received many column inches: as I recently discovered from a few continental friends, “canon” also means “sexy” in French slang.

I expect this coincidence was the very least of Canon’s concerns when its executives met to discuss their .brand TLD strategy, but it does highlight a major issue that some companies will have to deal with when the ICANN new gTLD program gets underway.

They may think their brand is unique, but unless they’ve done their homework they may find themselves competing with, or blocked by, equally legitimate applicants from other nations.

Companies planning to participate in the program – even only as a challenger – will need to have done a fairly daunting audit of their key brands if they want to avoid nasty surprises.

Ensuring a brand is a unique, registered trademark in one’s home territory is only the beginning.

Companies need to also ask themselves what, if anything, their mark means in other languages, what it looks like in non-Latin scripts such as Arabic and Chinese, and whether it has similarity of “appearance, phonetic sound, or meaning” to any other potential new TLD string.

We already have at least one double entendre in the DNS – the ccTLD for the tiny Pacific island of Niue, .nu, means “.naked” in French, as the registry discovered to its benefit many years ago.

If Canon had not decided to apply for .canon, could a French-speaking pornographer have applied for the TLD instead, on the quite reasonable basis that it is also a “generic” string?

ICANN’s trademark protection policies would make such a delegation highly unlikely, but Canon would have found itself forced into a defensive fight to protect its mark.

Of more immediate concern to the company is of course the question of who gets to register canon.xxx.

It seems likely that ICM Registry’s sunrise policy is strong enough to ensure that this particular .xxx domain is never used for pornography, but only if a) no existing pornographer has a trademark on the string and b) Canon remembers to defensively register.

In the unlikely event that Canon forgets to defend its mark, a pornographer who registered canon.xxx for a legitimate French porn site could well find himself with a UDRP-winning domain.

Almost half of trademark-conscious companies are considering a “.brand” top-level domain, according to a survey carried out by World Trademark Review magazine.

The survey also found that there is much more interest in new TLDs among marketing folk than lawyers, which is perhaps not surprising.

So far, only a few potential .brand applicants have been revealed. Canon has been the most brazen about its plans, but others including IBM and Nokia have also dropped hints.

The WTR reported:

WTR’s survey of in-house trademark counsel, attorneys in law firms and marketing professionals found that an average of 54% responded “Yes”, “It’s likely” or “Maybe” when asked whether their company/client would apply for a new gTLD. Of these, 81% confirmed, like Canon, that the string would be their master brand.

A break-down of these numbers kindly provided by WTR show that “Yes” was easily the least common response, but that marketing professionals expressed more interest than lawyers.

Asked whether their company would apply to run a new TLD, only 6.8% and 9.5% of in-house counsel responded “Yes” or “It’s likely”, compared to 19.6% and 15.2% for marketers.

About 54% and 33% responded “No” to the same question, respectively. The remainder were on the fence with a “Maybe” response.

Lawyers in private practice, when asked the same question, were more confident than their in-house counterparts, with 18.9% saying it was “likely” at least one client would want a gTLD

Whichever way you cut it, this adds up to a pretty decent chunk of .brand applicants. ICANN has previously said it expects between 100 and 200 such applications in the first round.

About 350 people responded to the survey in total. The full results and analysis are published in the latest edition of WTR.

Under the alliance, Neustar and UrbanBrain will provide brand owners with the expertise and support required to prepare and submit their applications to ICANN, and will provide all of the registry services necessary for brands to launch and operate their own Internet extensions.

NeuStar already operates the .biz and .us registries under contract with ICANN and the US government respectively, as well as providing back-end services for a number of other TLDs.

Should “registry service providers” be subject to the same restrictions as “registries”?

Where’s the harm in allowing cross-ownership and vertical integration?

It’s an extraordinarily complex set of questions, so it’s perhaps not surprising that the working group, which comprised a whopping 75 people, has managed to reach agreement on very few answers.

Its initial report, described as a “snapshot” and subject to change, states:

It is impossible to know or completely understand all potential business models that may be represented by new gTLD applicants. That fact has been an obstacle to finding consensus on policy that defines clear, bright line rules for allowing vertical integration and a compliance framework to support it

Having lurked on the WG’s interactions for a few months, I should note that this is possibly the understatement of the year. However, the WG does draw four conclusions.

1. Certain new gTLDs likely to be applied for in the first round will be unnecessarily impacted by restrictions on cross-ownership or control between registrar and registry.

I believe the WG is referring here primarily to, for example, certain “cultural” TLDs that expect to operate in linguistic niches not currently catered for by registrars.

The operators of the .zulu and .kurd TLDs would certainly find themselves without a paddle if the rules obliged them to find an ICANN-accredited registrar that supports either of their languages.

There are other would-be registries, such as .music, that call themselves “community” TLDs and want to be able to sell directly to users, but my feeling is that many in the WG are less sympathetic to those causes.

2. The need for a process that would allow applicants to request exceptions and be considered on a case-by-case basis. The reasons for exceptions, and the conditions under which exceptions would be allowed, vary widely in the group.

There’s not a great deal to add to that: the WG spent much of the last couple of weeks arguing about “exceptions” (that they could not agree on) to a baseline rule (that they could not define).

3. The concept of Single Registrant Single User should be explored further.

An “SRSU” is a subset of what a lot of us have been calling a “.brand”. The proposed .canon TLD, under which Canon alone owns .canon domains, would likely fall into this category.

The WG’s report suggests that SRSU namespaces, should they be permitted, should not be subject to the same restrictions as a more open and generic TLD that sells to the average man on the street.

The alternative would be pretty crazy – imagine Canon owning the registry but being forced to pay Go Daddy or eNom every time it wanted to add a record to its own database.

I do not believe that a hypothetical .facebook, in which Facebook is the registry and its users are the registrants, falls into the SRSU category. Which is also pretty nuts, if you’re Facebook, forced to hand your brand over to the world’s domain name registrars.

4. The need for enhanced compliance efforts and the need for a detailed compliance plan in relation to the new gTLD program in general.

One principle that has come through quite clearly whilst lurking on the WG mailing list is that the degree of distrust between participants in this industry is matched only by the lack of confidence in ICANN’s ability to police bad actors effectively.

Domain name companies are masters of the loophole, and ICANN’s enforcement mechanisms have historically been slow enough that yesterday’s scandal often becomes today’s standard practice.

This sums it up pretty well:

Some members feel that loosening vertical integration/ownership controls may let the proverbial “genie out of the bottle that can’t be put back” should competitive harms result in the marketplace. Others believe that adopting restrictions on vertical integration or cross ownership is the wrong approach altogether, and that the focus should be on protecting against harms, and providing sanctions where harms take place.

The WG currently has six policy proposals on the table, which vary from the “no VI allowed” of the current Draft Applicant Guidebook to “some VI allowed” to “full VI allowed”.

There was a poll of WG members a few weeks back, to see which proposal had most support. It was inconclusive, but it left three proposals clearly in the lead.

The so-called Free Trade proposal, which advocates no limits on cross ownership, was originally authored by Sivasubramanian Muthusamy of ISOC India Chennai.

The proposal as it currently stands puts the focus on ICANN troubleshooting undesirable activities through compliance programs rather than ownership restrictions.

Opposed, a proposal known as RACK+, offered up primarily by Afilias, some of its partners, and Go Daddy, favours a much more restrictive policy that is more aligned with business models established under the last ten years of gTLDs dominated by .com.

RACK+ would impose a 15% ownership limit between registries, registrars and registry service operators, ostensibly in order to prevent registrars abusing privileged registry data.

But under RACK+, all TLDs, including .brands and obscure community TLDs, would be obliged to accept registrations only through ICANN registrars, on a non-discriminatory basis.

This would probably render the .brand TLD market stillborn, if adopted by ICANN, I reckon.

A third proposal, called JN2+, originally authored by representatives of NeuStar and Domain Dimensions, occupies a spot somewhere in the middle ground.

It also proposes 15% ownership caps between registrars, registries and registry service providers, but it contains explicit carve-outs for SRSU-style .brands and “community” TLDs.

Because I’m a wimp, and I have no desire to be drawn into the kinds of arguments I’ve been reading and listening to recently, I’m going to quote Milton Mueller here, saying JN2 “had the highest acceptability ranking of all the proposals” when the WG was polled.

(Sorry.)

I find it rather surprising that the WG seems to be calling for more policy work to be done on ICANN’s compliance programs before the issue of vertical integration can be fully resolved.

If anything, this seems to me to be yet another way to risk adding more delay to the new TLD program.

There’s a public comment period now open, here. And here’s the report itself (pdf)

The flood of negative comments to ICANN yesterday almost obscured the fact that a few companies have hinted that they will apply for their own “.brand” top-level domains.

As Antony Van Couvering first noted on the Minds + Machines blog, IBM’s comment on version four of the Draft Applicant Guidebook makes it pretty clear the idea of a .ibm is under consideration.

IBM’s filing raises concerns about the issues of sunrise periods and vertical integration, with particular reference as to whether .brand owners would be exempt from such things.

This suggests IBM is thinking about its own .brand.

If we make the (admittedly cheeky but probably realistic) assumption that the large majority of comments filed with ICANN are self-serving, we can infer that anyone taking in an interest in the nuts and bolts of running a new TLD has probably considered applying for one.

Microsoft, while generally opposed to a large-scale new TLD launch, is very concerned about parts of the DAG that would allow ICANN to transfer a .brand delegation to a third party if the original registry were to shut down for whatever reason.

In other words, if Microsoft one day decided that running “.windows” was a waste of time and decided to shut it down, could ICANN appoint Apple to take it over?

I suggest that this is something that you only really worry about if you’re thinking about applying for a .brand TLD.